Something Old, Something New

Last week featured two noteworthy events, one old, one new (borrowed and blue will have to wait for another time). The old one was Ambassador Katherine Tai’s speech on the administration’s trade policy, which repeated themes she and others have articulated before. The new one was legislation providing for congressional approval of the United States-Taiwan Initiative on 21st-Century Trade. Let’s start with the new one.

Last Tuesday, the House Ways and Means Committee approved legislation by a vote of 42 to 0 (when did that last happen?) that approved the first part of the trade agreement with Taiwan signed last month and required the administration to submit the second part for approval once it is concluded. The legislation also established stringent consultation and transparency requirements for the negotiations, including a requirement to share texts and U.S. proposals with Congress before they are presented to Taiwan. This is significant for two reasons. It is a long overdue assertion of congressional authority under Article 1 Section 8 of the Constitution, which has gradually eroded in recent years, and it appears to have legs. A unanimous vote in the Ways and Means is nothing to sneeze at—the same bill was introduced in the Senate by the chair and ranking member of the Finance Committee, indicating considerable interest in the issue over there as well.

I have said before that Congress has never been happy with the quantity and quality of consultation and participation it has in trade negotiations, but recent conversations suggest that the mood on the Hill in both parties is grimmer than usual. That will put the president in an awkward position if he threatens to veto the bill. Given the long time he spent in the Senate, he knows better than anyone the power of Congress when it feels its prerogatives have been usurped. The bill may also be the first of several. Congressional frustration is not limited to Taiwan. Members of Congress also think the Indo-Pacific Economic Framework and Americas Partnership for Prosperity agreements should be submitted for approval, along with any bilateral agreements that might develop, such as with Kenya or the United Kingdom. That means the door is open for subsequent bills either tailored to specific negotiations like the Taiwan bill, or a general bill that would restore the basic negotiating authority that expired in 2021. CSIS has created an expert working group that is developing language for the latter possibility, which addresses what agreements would have to be approved by Congress—language we have shared with congressional staff. It turns out to be a very complex legal question if you try to frame it generically rather than to a particular agreement.

It is also worth noting that the committee vote was a reminder of a point I made two weeks ago—that trade can be a bipartisan issue. In this case it’s bipartisan annoyance, but it is nonetheless agreement on a common objective. The smart move would be to embrace it, not fight it.

The old business last week was Ambassador Tai’s speech re-explaining the administration’s trade policy. She once again delivered an elegant philosophical justification for what is, in essence, a political decision to avoid more intra-party battles between the Democratic left and center. There are no doubt people in the administration who believe that traditional trade agreements have entailed more costs than benefits, but you won’t find many people on the outside who are convinced that those agreements are a primary cause of economic inequality, job losses, the decline of manufacturing, and everything else bad that happened in the past 40 years. Those are all afflictions, but we’ve been cursed with them for at least 50 years, long before we started negotiating free trade agreements, and their causes are many, with trade playing a relatively minor role compared to technology and productivity improvements and the overall transition to a service-based economy.

I confess I’m getting as tired of writing about this as you no doubt are tired of reading about it. Nevertheless, there are two things in particular about this new approach that make me sad. One is that it sells short not just the benefits of trade, but its necessity. The United States is a mature, slow-growth economy with a soon-to-be declining population unless we can get our immigration policy right. Companies that want to grow need to export. Trade agreements facilitate exports—for both parties. Not to pursue market opening is to miss opportunities we will sorely regret later.

My other lament is that this is a policy that diminishes us as a nation despite its intentions. The United States has been great for the past 80 years because we have been willing to reach beyond our borders and support people’s aspirations around the world. Ambassador Tai argues that our new policy is focused on precisely that, but other countries contrast our rhetoric with policies that promote domestic production, reshore manufacturing, violate international trade rules, and offer few tangible benefits to our partners. Ambassador Tai may see a noble crusade in improving the lot of workers worldwide and promoting sustainability, but our trading partners see another case of a big country ignoring the rules and pushing around smaller ones. As John Mitchell said when the Nixon administration was coming into office, “Watch what we do, not what we say.” That was ironic in light of what became the Watergate scandal, and the irony recurs today. What we are doing is very different from what we are saying, and the message is not lost on our trading partners.

William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C.